Thursday, May 26

Architect of Digital Yuan Says CBDC Can Be Built on Ethereum Network


cbdc ethereum

Yao Qian, a former director of the PBOC’s Digital Currency Research Institute, claimed during the spring meetings of the 2021 International Finance Forum (IFF) that the central bank digital currency could work on the Ethereum network.

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Talking about its operational architecture, Yao Qian, head of the science and technology supervision bureau of the China Securities Regulatory Commission (CSRC), said that a central bank digital currency (CBDC) can operate directly on the Ethereum network or Facebook-powered blockchain payment system Diem:

“The currency runs directly on blockchain networks such as Ethereum and Diem, then the central bank uses BaaS services to directly issue the central bank’s digital currency to users without intermediaries.”

Overall, Yao outlined seven aspects to consider when researching and developing a CBDC: its technical route, value attributes, operational architecture, interest accrual, distribution, smart contracts implementation, and regulatory issues. The official states that digital currency cannot be a “simple simulation” of physical money, and this provides a basis for creating smart money. However, he also pointed out the vulnerabilities of smart contracts, claiming that the technology should mature.

When it comes to legislation, Yao calls for a perfect balance between protecting users’ privacy and ensuring compliance with basic anti-money laundering and know-your-customer (KYC) guidelines.

Known as the Crypto Father

Crypto enthusiast Yao, dubbed the “Crypto Father” of China, is known as one of the most influential people in the blockchain industry. Prior to Mu Changchun’s arrival in September 2019, he was the head of the digital currency research subsidiary of the People’s Bank of China (PBOC).